Oil Prices Inch Up on Tight Supply Outlook and Risk Appetite Following US Government Shutdown Deal

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Oil prices saw a slight rise, recovering from the losses experienced at the end of the previous week. Investors shifted their focus to a constrained global supply outlook, while a last-minute deal in the US to avert a government shutdown boosted risk appetite. Brent December crude futures increased by 25 cents to reach $92.45 a barrel, while US West Texas Intermediate crude futures gained 29 cents, totaling $91.08 a barrel.

Key Points:

  • Brent December crude futures rose by 25 cents, or 0.3%, to $92.45 a barrel.
  • US West Texas Intermediate crude futures gained 29 cents, or 0.3%, reaching $91.08 a barrel.
  • Both benchmarks experienced nearly a 30% rally in the third quarter due to forecasts of a significant crude supply deficit in the fourth quarter, following extended supply cuts by Saudi Arabia and Russia.
  • OPEC+ is unlikely to make changes to its current oil output policy in the upcoming joint ministerial monitoring committee meeting, according to four OPEC+ sources.
  • While OPEC+ is expected to maintain its output policy, Saudi Arabia might consider easing its additional voluntary supply cut of 1 million barrels per day.
  • China’s factory activity expanded in September for the first time in six months, indicating a potential stabilization of the second-largest economy.
  • Concerns about a property slump, declining exports, and high youth unemployment in China continue to delay a robust economic recovery, potentially affecting fuel demand.

Analysis: The slight increase in oil prices is attributed to a combination of factors, including a tight global supply outlook and restored risk appetite following the resolution of the US government shutdown issue. Additionally, the decision by OPEC+ to likely maintain its current oil output policy contributes to the stability of prices. However, concerns about the Chinese economy and potential impacts on fuel demand remain a factor to monitor in the coming months. The slight rise in prices reflects a delicate balance of global economic factors influencing the oil market.

BD

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